Buy-to-let proving to be a favourite pension plan

As figures from a report by a group of lenders illustrates that buy-to-let investment is still expanding, a leading landlord organisation survey shows that the great majority of holders of landlord insurance policies regard their property as a pension plan.

The third quarter report from the Council of Mortgage Lenders (CML) shows that almost £12 billion of loans were directed in the way of buy-to-let investment during the first nine months of 2012. It is an amazing figure and up 19% on 2011 and it clearly shows the housing sector is reliant on homes being bought by property investors as the banks continue to shun first time buyers. Further proof of the demand in the private sector comes from yet another report, this time by LSL Property Services, that shows the average rent in England and Wales has hit yet another high of £741.

It is great news for landlords and a report by the National Landlords Association shows exactly why people are attracted to the business. The report revealed 80% of those questioned had invested in a rental property as the best way of securing a pension, with six out of ten saying their property portfolio would be their only source of finance in retirement. Furthermore approximately 40% said they would organise their retirement date to the state of the housing market.

David Whittaker Managing Director of Mortgages for Business was not surprised by forecasts from estate agents Savills who predict a rise in rental achievement by 18% in the next five years and said “The owner-occupier market is sinking deeper into the mire and dragging property prices down. It’s great news for buy-to-let investors, able to snap up cheaper property, usually at a higher loan to value ratio because lenders are willing to advance more when property prices are lower.”

With the average deposit for first time buyers having gone from £12,000 to £58, 000 in a few short years there seems little likelihood that buy-to-let investors will meet much opposition from owner occupiers in the near future when it comes to bidding on a property.

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